DAVID CAMERON has labelled senior Tories demanding immediate withdrawal from the European Union as "pessimists."

The Prime Minister has rejected calls from former chancellor Lord Lawson and ex-cabinet minister Michael Portillo to leave the EU now, and believes he can achieve fundamental reform of the body.

Speaking at an investment conference in central London, Mr Cameron said: "I am faced as I do so, if you like, by two groups of pessimists.

"There are some pro-European pessimists who say, 'you have to, in Europe, simply sign-up to every single thing that anyone in the EU suggests. You sign every treaty, you sign everything - there is no alternative'.

"I think they are completely wrong.

"The second group of pessimists say there is no prospect of reforming the EU, you simply have to leave. I think they are wrong too.

"I think it is possible to change and reform this organisation and change and reform Britain's relationship with it."

After the strong showing of the anti-EU UK Independence Party in last week's council elections, the pressure has been growing on Mr Cameron to hold a referendum on Britain's membership before the 2015 general election.

The Prime Minister has vowed to hold a referendum in the next Parliament, providing the Conservatives remain in office, but Mr Portillo described the plan as an "insincere ploy" and said the EU no longer served the UK's interests.

Lord Lawson expressed similar views earlier this week amid growing unrest in Tory ranks over the rise of Ukip.

Michael Portillo believes the UK is "unhappy" in the EU.

The UK is unhappy in the EU. We do not share its vision, partly because we are not visionary by temperament.

Former Cabinet Minister Michael Portillo

Mr Portillo - now a pundit and broadcaster - said: "The default position of the political class is defeatism: the belief that Britain could not survive outside the union; and the political class assumes that the public shares its defeatism.

"The UK is unhappy in the EU. We do not share its vision, partly because we are not visionary by temperament.

"We are not so easily convinced that the EU is a necessary response to the horrors of the Second World War because our experience of that war was different. We did not endure revolution, dictatorship or invasion.

"Other countries may look to institutions at the European level because they doubt the durability of national institutions that perished in that conflict. We do not, because ours survived."

Mr Cameron was also critical of the EU, but believes the UK should try to reform the institution before holding a referendum.

He said:"It is not competitive enough, it is not open enough, it is not flexible enough, and it is not competing effectively with fast-growing parts of the world.

"Added to that you have the European single currency which is driving enormous change in Europe as it involves the members of that single currency giving up large amounts of sovereignty about how they run their countries.

"At this moment when the single currency is driving such change it is completely right for Britain to say, we want to make some changes with our relationship with the EU, we want to make some changes to the EU itself.

"The EU is going to have to be flexible enough to include within it countries like Britain who are not in the single currency and won't join the single currency, and countries that are in the single currency.

"That is a totally logical, sensible, practical position."

Nadine Dorries has been brought back into the Conservative Party amid fears she would join Ukip

In a move seen by many as an attempt to stop Ukip gaining representation in the House of Commons, the Conservative whip was restored to Mid Beds MP Nadine Dorries last night.

Ms Dorries, an outspoken critic of Mr Cameron, was suspended by the Tories last year after flying to Australia to take part in ITV gameshow I'm A Celebrity while Parliament was sitting.